What a difference a year makes. Last year, we experienced broken supply chains, empty shelves, and long delays at logistical chokepoints. The Port of Los Angeles had over a hundred cargo vessels waiting offshore for their chance to unload, while shortages of truck drivers and chassis made the unloading nearly impossible. The ripple effects of the supply chain breakdown extended to empty warehouses and the unavailability of goods in stores or online. Above all, there were higher prices for goods due to competition for scarce supplies.
Only 12 months later, the overall situation looks totally different. Vessels are unloading, trucks are available, and warehouses are full. Does that mean there has been a happy ending to the supply chain crisis? Not at all.
The current situation reveals as much dysfunction as the situation last year. But the dysfunction has taken a different path. Warehouses are full because consumers have stopped buying. Ships are being unloaded because demand for goods has dropped sharply and new orders are drying up. Trucks, containers, and chassis are suddenly available because far few goods need to be transported. In other words, world trade is slowing, the world economy is heading for recession.
So, the cure for a supply chain crisis is a recession where no one is buying much of anything.
We can only hope that before we come out of recession again, we have created shorter, more resilient and more secure supply chains.
Sven Franssen